The real stories from inside the F1 paddock

Mirages in the desert

Further to my previous post, I see that Forbes has paid me the compliment of going through my analysis, trying to pick holes in it. I trust that if I am proved to be correct they will dump their current correspondent on such matters and come to me for help… I used to work with them on their rich lists but in the end I didn’t see the point as they didn’t pay.

So let me follow-up on why I don’t believe a word about a race in Sin City.

When F1 visited Las Vegas in the early 1980s it was a place with a population of less than 500,000. Today it has four times that population but it effectively stopped growing in 2007. Gambling has been stagnant as well as a result of the rise of Internet gaming, deregulation in other States, and foreign expansion by the casino companies, notably in Asia. Today more visitors go to Las Vegas for its attractions (fake though they may be) than go for gambling. Land on The Strip that used to be used for parking lots has disappeared beneath vast hotel complexes. The city has 150,000 hotel rooms and fills them in dramatic fashion, but the rates are low and nearly 60 percent of visitors still come by road. The Las Vegas Convention and Visitors Authority recognises that international visitors spend more money and has set a goal of boosting foreign visitor numbers to 30 percent of the total by 2020. This will require a serious hike from 6.4 million to 12 million. Thus one can see that there is an argument that Vegas could benefit from a Grand Prix and I am sure that some of the local entrepreneurs might be willing to invest in the idea, but are they really willing to invest sufficient money to make a race happen? And do they have the clout to close The Strip?

The Cirque du Soleil and a few other organisations are not going to pay $50 million a year, plus construction costs and the city is not going to want weeks of disruption on The Strip. If Bernie Ecclestone was not willing to compromise on a brilliant track plan in New Jersey, why would he in Vegas? It is a market that is about 10 percent the size of New York.

Races these days need government money: Singapore has proved that. Billionaires are not stupid with their money and they want numbers that pretty much guarantee success before they commit to vast investments.

The idea of a private-public partnership is good if the city is able to pay. They might consider additional taxes on hotel rooms for the race week, but there is going to be huge opposition to that from hotels at the other end of town. If the tax was to cover only a certain area then a percent of the business would switch to the cheaper districts. And would all this drive away regular business and end up costing money? Would F1 draw enough people to make it worthwhile. In this respect places where there is limited tourism (such as New Jersey and Long Beach) are much better bets than Vegas.

Would the city pay and give all the necessary permissions? It is doubtful, judging by recent attempts to get a soccer stadium built. The city has never had a major league sports franchise of any kind but there are attempts to get a Major League Soccer team going on at the moment. This will require a stadium and the promoters of the idea (quite rightly) feel that the city should pay some of the costs. The money being discussed is peanuts compared to F1 fees, but the city has been baulking at the idea for months because the growth of Vegas has meant that the money available is really required to sort out infrastructure problems, such as water and sewerage, not to mention schools and policing. There is also a strong tradition in the city – the capitalist Mecca – that private money should pay for new developments. These days many casino companies are listed entities and thus less willing to take risks and they have sought growth outside Vegas. Some have over-extended themselves, notably Caesar’s which is teetering on the brink of bankruptcy, with an impressive $24 billion of debt.

At the height of the recent financial crisis in 2009 the city did agree to allow the Las Vegas Marathon to close The Strip for the first time in its history, but that was for one day and not at times when the gamblers are going places. There would be a lot more resistance if there was to be an F1 race, which requires weeks of construction work and disruption. The Singapore GP has been a big success, but a lot of the city’s shopkeepers and taxi drivers hate it because it means they make less money. The flow of traffic affects all of the casinos and not all will be in favour of an event.

There is no real scope in Las Vegas for novelties such as night races as the time zones would mean an 8pm race would be shown in Europe at 5am, a worthless hour for TV viewing numbers. The only race that would work in F1’s big markets would be early in the morning and that would not work for Vegas.

All things considered, none of it really makes sense in real terms.

In the past Vegas has tried racing and has failed. In the 1990s a promoter called Tommy Baker tried to sell the city on a race with free admission. It did not work. Later Champ Car managed a race down in the backwoods behind the downtown area and that failed.

Remember too that this story came from Bernie Ecclestone by way of media who print whatever he wants them to print for fear of losing the access they currently get. Bernie has always known how to play suckers and he’s doing just that with this story. And, of course, it is completely out of character for him to talk about deals that are under discussion unless it serves his purpose to make them public. And his folk tend to get their knickers in a twist when such stories leak out. So why is it put there?

The only sensible conclusion is that this is either part of the process to get F1 talked about in the US in the run up to Austin (an old Ecclestone trick used all over the world) or he wants someone else to feel pressure and sign a deal. Having failed to get races off the ground in Long Beach and New Jersey (when both would have been possible and desirable if the Formula One group had been willing to invest) a success in the world’s largest consumer market is long overdue. Austin is OK, but in global terms it is still just a small town in Texas. Vegas is not ultimately a big market, in the way that New York and Los Angeles are.
I am going to go on watching for action in these markets. And given Vegas’s location I’d say LA is still the place watch.

I wonder if the Fontana Speedway would be a suitable candidate? With a few modifications, obviously.
I’d love a race in Long Beach, for historic reasons and it is nearby, but from what I hear, that is unlikely to happen.

Zeph: Fontana (Official name: Auto Club Speedway) is a horrible place – both the locale (site of a almost cleaned up former steel mill and toxic waste site) and the crazy amount of sand that blows onto the track from deserts north of the mountains. It’s mostly an industrial wasteland that surrounds the place that you are forced to pass through on your way from LA to income reducing Las Vegas. Side trips are the porn shoots around the valley here if your into that kinda thing – if not, keep moving. Speaking of sand: You should see the drivers helmets after 500 miles here. They have to change helmets after every practice as they are sand blasted down to the carbon. It’s got a really low grip surface in addition to all that sand, (the paving material was sub-grade / lowest bidder stuff) and then there are those paving seams between lanes… seams that have caught out many racers as they seem to grab a wheel and then they’re railroaded into a wall at something over 200mph. The road course is pretty dull in a Daytona infield kinda way which really, what can you come up with in the infield of these super speedways that adds anything to racing? I think we’ve seen this all before? Oh wait, yeah, Indy… You can’t race here in summer daytime hours unless your into S&M heat treatment. The track still has it’s original 1997 pavement that is closer to 400 grit sandpaper then it is to pavement. In 1995 they put a plastic membrane over the toxins and then 2 feet of soil over this place to prevent leakage. Bring bottled water. Sarcastic sounding or not – but it really is a dump…

Joe, why are you giving so much publicity to this article? My sister writes for Forbes and I know she is paid by the number of views. I read the Vegas article when the link to it went up in your other thread and have just seen that the number of views has shot up since then. I’m not saying this for you to print it but to let you know how it works. As they say, all publicity is good publicity… Jarvo

Because it is written under the Forbes name and is not only unfair to me but also badly written and rather too close to my article for comfort. The author also seems to have a policy of always trying to include references to me that make me look bad. This is probably because in the past I have pointed out embarrassing truths about him. I do this because I think the fans should be aware of how some F1 news is sourced. I don’t care one way or another about the individual, but I think the way in which he constantly cross-references supposed facts to other articles HE has written elsewhere (without pointing out that he was the author) is dubious journalism and seems to be used simply as a form of self-promotion. In my honest opinion, Forbes ought to do a little more due diligence to see whether this sort of article is in their best interest. I know that I have less respect for the Forbes brand since they began using this stuff because I think if it is like this in the industry one knows one has to wonder whether it is the same in others. As to the money, it is true that Forbes asked me to give them information for free for several years. It was the usual “sorry, but we don’t have the budget” routine used by a lot of big media firms. In the end I gave up as there was nothing in it for me. Forbes got the credit. I did the work. I have no idea how they pay people for Internet stories, but if they want good content they need to pay properly.

Very interesting read as always Joe, Forbes really are’t playing fair are they. I love how they quote you as being a F1 Blogger, that’s a real insult isn’t it. I bet none of their journalists are F1 accredited.
Keep the real stories coming

No, none of them are are accredited. The only time I can remember seeing the author of this article in an F1 Paddock in the last 10 years was at Silverstone when he (and his sidekick) appeared with a non-media pass and were building a statue outside Bernie’s motorhome. I thought that was a fairly odd thing for the business guru of F1 to be doing…

Well, turnabout is fair play. Almost every F1 race is on at 5:00 AM where I live on the west coast of the US of A; some are on at 1:00 in the morning. I always look forward to Austin because I can actually drink a beer while watching the race.

Didn’t he just plagiarize a chunk of your previous blog post on this topic? The paragraph in Forbes portraying Ecclestone as a magician is virtually a copy of what Joe wrote a couple of days ago. Amusingly it is used to support his opposing viewpoint!

Seems to me to be pretty easy for Bernie to report Herman in LV…. Herman you look exhausted with all this work on Sochi. You are my favorite track designer, here take an all expenses paid vacation with the family in Las Vegas. What is that Herman, you have been before. (that makes a couple of trips). Nowhere does it say he was looking at a track,,,, but even if it did, So Herman think about options of a track should we one day build one there. Have a nice vacation……

I think that Joe read it correctly, just Bernie making a story before Austin for whatever the motive, because no one cares about comments about Danica anymore.

Joe, what is going on in your first para? You left Forbes because they didn’t pay, and yet you now hope they will dump their man and seek your help once more.

I would also love some clarification on gambling, the mainstay (formerly) of LV.
How do the figures breakdown of punters who
– have the occasional small flutter for fun
– have their lives totally ruined, grasping after a daft dream of riches
– win a fortune from a modest bet

I’ll bet these statistics will not be provided by those who run the business

It is not worth explaining the Forbes thing. I used to help them out with numbers for their rich list that was all, but they wanted it for free. I only work or free for you lot! As to the rest of it, I suggest you ring up the Visitors Authority and ask them. I am not a spokesman for the place.

I did not mean to imply you were their spokesman, but they are not likely to spill the beans. I do believe that the business is wholly owned and run by the pious Mormons of Salt Lake City ! Mormons exploiting morons you might say.

It’s difficult to see what present day visitors go there for. Attractions are fake, as you point out, Frank Sinatra is no longer in residence, and there is pretty much damn all going on otherwise…. maybe a booming porn/prostitution culture. Not enough,surely, to entice millions to visit.

A transient population with nothing but sex/easy cash on their minds must be the last place to host a F1 event…

The Forbes article is full of inconsistencies… how your [sic] ‘friend’ can be considered a journalist when he writes so badly is a mystery… the piece appears to have been thrown together to meet a deadline…

I agree with your analysis excepting the presence of the billionaire and F1 fan Mr. Laliberte. If he wants to burn a hundred million or so hosting a street race in Las Vegas then he can do so; it doesn’t matter if it makes economic sense. In fact, “not making economic sense” is why Bernie’s F1 business model relies on government money, or other “dumb money” such as that of Mr. Laliberte.

I saw that article and left quickly as it was clearly a dressed-up character assassination masquerading as journalism. I can form my own impression of the people I read – I don’t need to be told what to think by bloggers-for-hire.

On the idea of a Vegas Grand Prix, is there any way the Las Vegas Speedway could be utilised as part of a new facility? the last time I was there, land was in abundance, could this not convert to an extension?

It is wonderful to read the cynicism in your words. The only F1 articles popping into my news feed over the weekend were regurgitated Las Vegas Grand Prix dross, or the hateful piece in the Mirror trying to position Bianchi as a dangerous driver.

I love the sport and I know quite a lot about it. All I am doing is asking questions and having opinions. I am as honest and objective as it is possible to be because this is the only way that one wins respect in what is a very political business. I know a lot of people and a lot of information and all I am trying to do is guide fans who care to understand it better. I respect Bernie for the game he plays but I am not going to be a lap dog if I don’t agree with him.

Here is something I wrote in 1998 and I think it holds true:

“Bernie Ecclestone is a very clever man. He knows that a bit of criticism from time to time keeps everything bubbling away nicely in the newspapers and he has been known to throw out the occasional “speculative” story to a hungry journalist to stir up a storm.
I remember some years ago I had some problems with passes and was wandering around the paddock with a nasty cardboard pass (oh, the shame, the shame!) when I received word that Bernie wanted to see me in his office in the Control Tower.
“Whatchewan?” he said when I arrived.
“You wanted to see me.”
“Did I? Oh yeah. Gimme your pass. You’re a trouble-causer. An agent provocateur. You can’t have a pass. Go away.”
Luckily, I had been tipped off in advance that Mr E was planning to play a joke on me and did not crumble into a gibbering pile on the floor, begging for accreditation, when he took the cardboard pass away.
After a moment or two Bernie realised that there was no point, threw me the new hard card he had in his desk, clipped me round the ear and told me to go and cause trouble.”

I am pro the FIA, but I do not particularly like the way it is being run in relation to F1 at the moment. All things considered I am not in any way a threat to the business where I am, I’m just a minor reality check from time to time.

Lyndon B Johnson on FBI Director J Edgar Hoover: “It’s probably better to have him inside the tent pissing out, than outside the tent pissing in”.
James Baldwin: “The most dangerous creation of any society is the man who has nothing to lose.”

Keep up the good work. Sadly, when a non-specialist journo is called-out for not understanding something properly their reaction is all-too-rarely, “thanks for pointing that out, please help me understand how this really works….”

I found it amusing that Christian refers to you as a “sports blogger”, when he does not even have the Media Credentials for the paddock. That was cute. Then he goes on to steal your own words to make his counterpoint. How mature. What a loser.

I see Bernie as one (or all) of Macbeth’s witches saying “Double, Double, Toil and Trouble…”, stirring up eyes of newt, holding them up for all (or selected some) to see, and then dumping them back into the pot.

That’s more of a dated stereotype than anything. On the Strip two companies control the majority of the properties. For the last 10-15 years all the Strip properties recognize that events are a great way to make money. Five or six years ago non gaming revenue surpassed gaming revenue and the properties help promote outside events (like last weekends Supercross event) because it’s good for business. They would do the same for F1 if the conditions were right.

Non-gaming revenue includes food concessions and shows, not external events. The prices in the casinos have gone through the roof over the last decade to make up for the lost gambling revenue. I was truly shocked during my last visit by how much the prices had gone up.

I think the basic problem with holding a GP in Las Vegas, or by the looks of it, any other kind of sporting event, is that they don’t want anything to come between the casinos and people parting with their money in directions of said casinos. Everything else takes second fiddle to that. Unless or until they are willing to put their lust of gambling money aside for just one second, nothing will happen.

Joe, one thing I’ve always been too afraid to ask is if some of those tremendous fees F1 gets from governments ever finds its way to the bureaucrats who approved to deals. Should I shut up? Auto-moderate?

I couldn’t agree with you more Joe. The only incentive I see is the $100,000,000.00 that left Bernie’s private bank account several months back, however that incentive still exists, albeit in another form if Bernie’s looking at another venue and using Las Vegas as bait.

If you think a man like Bernie paid that $100M out of his private account, you should be looking (like always with him) at what the other side of the ledger is doing. You can bet there’ll be £100M coming in the other side from one of the ‘trusts he doesn’t control’, or something similar. He’s way past paying fines personally, just like most US Presidents are way past carrying cash.

Joe, you keep banging on about how important the US is market is, while also belittling the best times to grab our market share with US race timing (as you outright stated by claiming that a 5AM race on european time is too much to ask, OH BOO HOO – almost of all the other races happen at a very late/early hour for the US, maybe we could have more than 2 during prime western hemisphere hours? Maybe?).

You’re right. Europe does have more F1 fans. And it will stay that way until F1 decides to make some concessions towards our underserved market. Until those races are in the middle of the afternoon, LIVE, demanding proper television coverage, F1 will stay on some extra extra bundle channel buried in cable news. They haven’t bothered to air qualifying for several of the most recent races, FYI, and they move the actual channel around (there’s NBC, NBCSportsnet, and CNBC – thats the business news channel).

Either we’re an important market, and concessions will have to be made about the race timing (really, Joe, I can’t believe you’ve used that as a excuse against a US race. It’s not defensible, except for the fact they keep using that as an excuse)… or F1, and you folks, can stop talking about how important it is to break into this market. I wish the hot air would stop blowing. EIther make the move or stop leading us on, amiright?

Why are you so angry? I am not belittling anyone or anything. The fact is that the US is the world’s biggest consumer market by a huge margin. It will be for the next 25 years at least. F1 is a consumer business and thus it should be the primary target for F1. If F1 can work a deal with a race promoter or two or three that will put F1 on the map in the US I am sure that F1 can build up its presence. The problems is that F1 is asking too much money. That’s it. There is no slur on US racing, no slur on US fans. Just plain old economics. I am baffled by the tone of your comment.

What’s his issue? Hot air? Hardly, particularly when you’re talking about Bernie and his negotiation tactics. There are pros and cons to everything. As it stood earlier in the year, there were hopes that there would be five races in North America. That’s 20% of the schedule. Two races didn’t happen, as it turned out. However the desire is there, if not the logic of doing business on F1’s part.

I’m almost certain NBC hasn’t deviated from its customary live broadcasting of P2 anytime this year. Yes, with the EPL broadcasts, F1 gets bumped to CNBC when there’s a conflict, but ironically enough, CNBC has substantially higher carriage rates than NBCSN. For Austin, all three practice sessions will be shown live somewhere on “the NBC family of channels,” as Leigh Diffy is wont to say.

I’m also happy that whatever technical and legal wrangling between NBC and the Commercial Rights Holder/FOM (I heard from a disreputable source it was both) that kept P1 & P3 from being streamed on NBCSN Live Extra have apparently been resolved.

I’m not sure I like your tone, but I do agree that the odd hours are an impediment to wider acceptance here. For European races I have to get up at 4:45 so I can tune in at 5AM here in LA. Only diehard fans do that.

The race in Japan was at an agreeable 11:00PM Saturday night, I believe. Russia GP had me up at 4AM, Malaysia at 1AM etc.

Yeah, if you want to get a larger slice of the US market, nicer hours would be a great start.

A quick note: the “City of Las Vegas” does not encompass The Strip. Back in the ’50’s, when the first Strip properties were being planned, the city openly discussed annexing that area of South Las Vegas Blvd. developers, not wanting to deal with a proposed city-levied gross receipts tax, quickly got legislation moved through Carson City which created a new type of municipality, the township (or town), which didn’t have nearly the level of review and other obstacles to founding that previous Nevada municipalities had. Townships with municipal charters highly favorable to large businesses (read: casinos) were quickly founded, effectively locking the southern border of the city in place. As Vegas-the-metro-area has grown, Vegas-the-city hasn’t, such that only slight more than a quarter of the people who live in “Las Vegas” actually live in the City of Las Vegas.

So, the City has little to do with the goings-on on The Strip, where the governing bodies are the townships (which don’t really do anything) and Clark County. Of course, since so many “municipal” services are provided by the county, consolidated city-county-municipality partnerships, or supra-county entities, there’s little difference for residents between living in the city or outside of it.

Still, somehow, the Mayor of Las Vegas, not the County Chairman, not the CVB President, gets rolled out as the representative of “Las Vegas” and “The Strip”. Now, former mayor Oscar Goodman, who made his fortune being a useful idiot for the Mob and leveraged that into a fortune being a useful idiot for the casino industry, is straight out of Central Casting and played the role perfectly. (His wife, the current mayor, isn’t too shabby herself.) But if you’re looking for someone to have “the City” close down “The Strip” you’re looking in the wrong place.

Agreed, Las Vegas doesn’t make any sense – financially and figuratively. Southern California is the logical target perhaps even Baja California. Yet, if not Long Beach, what about Palm Springs – halfway between LA and Las Vegas?

I think that F1 needs to think about having different kinds of urban races, like Montreal, Melbourne, Monaco, Singapore, etc. it is important to be in or near large urban areas. The most important things about F1 are not, however, these. The key thing is to engage more with the public and bring costs under control.

Hi Joe, long time reader first time poster (cringe). Is the New Jersey race totally dead in the water? I think I read some of the area set aside for the creation of race facilities is being built on but the buildings will not be part of the race facilities. If that is accurate it leads me to think the project is not goin ahead.

I understand the reasons for wanting a F1 race in Azerbaijan and they are sound. However, the fans want the NJ race (you’re right it will probably become known as the NY race, which is unfair). Nothing wrong with New Jersey! :). The track layout looks great, the back-drop is amazing, even the fact that it seems to go through residential areas is fantastic. To be fair to Bernie if there was the appetite for the race it would happen. As an aside, other championships compete at it.

To generate revenue in the US either a race needs to happen in San Francisco or Miami. Why, because of the international business community in the Bay area and the money / location of Miami. Nowhere else in the US has the interest, funding and sports mad fans…along with hotel capacity (forget Orlando) and the willingness of the people to work around the problems of hosting F1 on a temporary circuit.

The reason the locals won’t fund F1 privately is because it’s a crappy deal. In terms of event size in Vegas it would struggle to make the top 10 in terms of people and revenue. If someone wanted to use private money, Short of closing the central part of the Strip they’d welcome the event.

Caesar’s isn’t nearly bankrupt, they are massively leveraged as a result of going private. They are in no immediate danger and are cash flow positive and have billions in assets. In fact they just completed a large scale development mid Strip and are refurbing older properties.

Downtown isn’t like it was when Champ Car was here. It’s all cleaned up and most if it gentrified. It would be a good place for a race.

Guy Lalibrate and Cirque don’t really have any sort of influence in town. They provide the shows but MGM provides the buildings, crews and infrastructure. Without that Cirque probably would have went bust a few years ago when they almost went bankrupt. MGM wears the pants in that relationship…

Under current law they can’t use tax revenue to provide that sort of funding to an event. The LVCVA does provide millions to events every year but not for costs like sanction fees. There is a room tax that generates that money. Getting a taxing district approved for it would take years and would require the law to be changed in order to use the money for facilities and a sanctioning fee. LVCVA money could be used for promotion, direct costs of having the event like permitting, police and fire, cleanup, medical, etc. The Strip is in the county, not the city. The futbol stadium is a bad deal too. There is no team, there are no firm revenue projections and no guarantees the city won’t be stuck with the bill as the promoters have no professional sports management or operation experience. If it’s such a sure bet they can find the money. Like AEG and MGM did for the new arena.